Metinvest expects lower sales in Q2 2020 compared to the previous quarter because of weaker raw materials supply and lower prices for finished steel. The company however, said it was unable to forecast the revenue and sales volume for this quarter due to COVID-19 related uncertainties.
The company reported in its earnings statement that it is focusing on finalizing the reconstruction of its hot strip mill in Illyich with an expected completion in Q4 2020. It also plans to complete its sinter plant by the end of 2020. The finished hot strip mill will increase Metinvest’s production capacity to 2.5mn mt annually, improve HRC quality, and reduce production costs.
In Q1 2020, Metinvest sold 4.2mn mt of metallurgical products, down 3pc from 4.3mn mt in the same quarter in 2019. However, while volumes sold decreased, revenue for this segment decreased more acutely, by 14pc to $2bn, from $2.3bn in the same period the prior year primarily driven by lower prices in respective markets.
Thirty-four percent of Metinvest’s total metallurgical revenue came from Europe followed by Ukraine at 26pc, Middle East and North Africa 22pc, Southeast Asia 4pc, CIS 7pc, North America 5pc and other regions 2pc.
Among the top three markets, revenue from Europe declined 15pc to $677mn in Q1 2020 compared to $800mn in the same quarter a year ago while revenue from Ukraine decreased by 7pc to $530mn and MENA declined 14pc to $442mn in Q1 2020 compared with the same quarter last year.
The sales of finished products fell by 3pc to 2.4mn mt in Q1 2020 from 2.5mn mt in Q1 2019 and constituted 58pc of total volume sold. Revenue from finished products such as flats, longs, and tubulars decreased by 14pc to $1.3bn in Q1 2020 against $1.5bn in the same quarter in 2019.
Sales of semi-finished products increased by 2pc to 1.3mn mt in Q1 2020 compared to the same quarter in 2019. Revenue in this segment decreased by 6pc to $508mn in the quarter compared to $543mn in Q1 2019. Sale of coke products declined by 14pc to 453,000mt in Q1 2020 compared to 529,000mt in the same quarter last year, with revenue for this business falling by 33pc to 119mn from $178mn during the same period.
The company’s mining segment which includes iron ore and coking coal concentrates sold material worth $518mn in Q1 2020, down 2pc from $530mn in Q1 2019. Mining sold 5mn mt in Q1 2020, up 11pc from 4.5mn mt in the same quarter a year ago.
In Q1 2020 The company’s capital expenditures declined by 25pc to $148mn from $198mn in the same quarter last year.
Metinvest’s adjusted EBITDA decreased by 14pc to $373mn in Q1 2020 against $435mn in the same quarter in 2019. EBITDA margin remained unchanged at 15pc in the latest quarter compared to Q1 2019.